Meet the new Treasury boss...

Commentary: Paulson fumbles away opportunity to push his agenda

NEW YORK (MarketWatch) -- He is a rebel and an outsider. A bird-watching, tree-hugging executive who came to Washington this summer to shake things up.

He is an outlaw, but every outlaw has his price. So, when the president asked him to help the administration, the rebel made some demands. He didn't want to be a mouthpiece or a puppet, we were told. He wanted to have an influence inside the White House. He must shape policy and lead a revolution.

So, imagine the surprise when in his first speech as the nation's Treasury Secretary on Tuesday, Henry Paulson read a text so unimaginative, so boilerplate and so boring, it made walking into the 95-degree heat outside the library at Columbia University seem like a relief. Paulson's prepared remarks can be found here.

His predecessor, John Snow, was increasingly under fire for his inability to silence critics of the administration's economic and budget policies. His speeches were repetitive. Out went Snow. The president hired the former chief executive of Goldman Sachs Group Inc.
GS, -0.28%
to put some integrity into the Treasury job. You know, shake things up.

"Mr. Paulson, according to a person close to him, has been assured that he will rank with the secretaries of defense and state in the Bush inner circle," Wall Street Journal reporter Deborah Solomon wrote. "If they materialize, those would be significant changes for a White House that has tightly held the power to make economic policy, essentially turning the Treasury secretary into a salesman for tax cuts, the centerpiece of its economic strategy."

With that as the backstory, Paulson had a golden opportunity to set a new course for himself, the president and the country. In the nation's media capital, in his home turf of New York, Paulson proceeded to out Snow Snow.

He talked about social security reform but didn't offer a plan. He talked about spending too much on entitlements, but didn't offer a plan. He embraced free trade, tax cuts and said he wanted to tackle problems associated with wage growth and income distribution.

Lloyd Blankfein, Paulson's successor at Goldman, rested his head in his hands and looked at the floor. Great timing, he must have been thinking.

Perhaps most disappointing, the man who instigated a shareholder uprising for pushing Goldman into environmental efforts talked little of his personal convictions. The closest he came to reshaping the national dialogue on energy was by talking about conserving power.

"We need to do more on the supply side, and we need to do more to conserve energy," he said. "In addition, we need to do much more in terms of investing in new technologies and further developing alternative sources of energy, including nuclear power and ethanol."

Even if you don't follow politics, you must have heard that speech by someone in the administration last year. And if that doesn't sound familiar, Snow fans will enjoy this one:

"I believe that a strong dollar is in our nation's interest," he said.

Two of Snow's last speeches -- an address to the Bond Market Association on May 19 and a speech to the U.S. Chamber of Commerce on May 12 -- touched on almost all of the issues Paulson discussed Tuesday.

Even the issue of Social Security, the topic many news reports seized on as being fresh in Paulson's speech, was a Snow favorite.

"The President remains dedicated to this issue, for the sake of our children and grandchildren," Snow told the BMA. "We understand that unfunded obligations are real obligations and we have a shared interest in solving the problem of the government's long-term unfunded liabilities."

Now, it's not quite fair to judge a new government official by his first speech. Christopher Cox's speech to the Securities Industry Association last fall centered on electronic filing for companies and how astronauts relieve themselves in their spacesuits. Yes, it was that good. Read Cox's remarks to the SIA.

Cox has since proven to be an active and capable chairman. If his resume is any indication, Paulson will likely do America proud at Treasury. But one has to wonder why Paulson would step away from perhaps the most powerful perch on Wall Street to accept what will likely be a two-year run as head of Treasury.

Two years is enough time, of course, to influence policymaking, and it's not hard to believe that Paulson is holding cards. Some say Paulson and Chief of Staff Josh Bolton are in charge of economic policy now, where Karl Rove used to make those decisions.

On the other hand, people following the secretary say he underestimates how Democrats will undermine Paulson's "bipartisan" efforts to fix things. Perhaps, but the smart money is on Paulson to come out of this lauded as he was when he left Wall Street. One speech isn't going to ruin the guy's career in D.C., not when he's stared down Dick Grasso, Eliot Spitzer and the rigors of becoming CEO of Goldman Sachs.

Two years to fix social security, fix the healthcare system, create a balanced playing field for free trade and erase the deficit? Paulson already sounds like a politician.

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